Mortgage and that too with bad credit?? It is quite a brave thing to ask for but not impossible after the new generation financial services entered in the industry through FinTech. Online mortgage brokers and lenders calm all your anxieties on a mortgage through their progressive approach.
Gone are the days when a low credit score was the end of a happy financial life. Now, lending solutions are much smarter than the established practices. Through some practical measures, you can get funds to buy your new home despite a ‘not so good’ payment history.
FIRST AND FOREMOST
Work On the Improvement of Financial Records to Get Stronger In Chances of Approval
The safer you play, the better is the result. The lenders should see an improved version of your financial behaviour because poor credit is a big embarrassing spot. The most important thing that it steals from your identity is the creditworthiness for the financial products. Finance companies act reluctant and hesitate to approve of you. With a positive change and an increase in the rating, it is easier to win the trust. Here are some ways to upgrade credit score performance.
- Pay the bills and debts on time. Delay in payments is the prime reason for flaws in fiscal records.
- Close the bank accounts, credit cards etc. that are not in use
- Do not pay the minimum due on credit cards. It shows you weak in the money matters as only the people in crisis work on this option to avoid any big mess.
Once you follow the above suggestions, the right change is sure to come. In finances, small actions, whether they are good or bad, leave a significant impact.
NOW THE OTHER REMEDIES
Once the betterment of payment history happens, pay heed to other aspects.
If multiple debts – Consolidate them all to create space in the creditworthiness
The mortgage brokers, as well as the lenders, always want you to have less number of obligations. A person with many debts and instalments is not suitable to bear a massive burden of home loan.
Negative effects of many debts –
- Sundry instalments
- Varied interest rates of varied debts adds to the burden
- Less or no space for new loan etc.
Positive effects of debt consolidation –
- All the obligations gather to become one big loan
- One instalment in place of many
- Fixed rate repayment
- Gives way to exploit other monetary opportunities
Through the above points, you can easily understand the vital role of consolidating financial commitments. Why wait for more? If your finances are scattered, organise them and get better chances of mortgage approval.
Show a good income
It is the most reliable tool to use if you want to borrow funds with bad credit. You can really get a mortgage with bad credit but good income from Shinemortgages.co.uk, as that shows the potential of repayment capacity. Provide the salary slip to the lender to ensure the actuality of what you mention about the income thing.
In spite of high earning, you need to take care of a few things –
- It is excellent that your income is considered in number but do not apply for any new loan or credit card etc. A mortgage is a much bigger loan, and that needs more considerable ground to land.
- Keep an excellent income-outgoing ratio. For a bad credit scorer, 70:30 is the idol one.
Gather the larger deposit amount
The minimum requirement on deposit is 5%. However, with a degraded rating, it is advisable to play safer at every aspect. Here is an example to understand things better.
You want to apply for a mortgage amount of – £200,000
According to 5%, your deposit amount should be – £10,000
It is better if you swell it up to a bigger figure, maybe between £13,000 and £15,000
This can surely make the lending company consider the loan request seriously. If you approach a broker, it can find a better deal with no compromises on loan amount. Large size down payment always helps the applicant win the race even on rough ground.
As the bad credit situation is complicated, you need to take every step with caution. Nothing hits better than a positive approach in your financial habits. Show that to the finance companies through the credit report, and the conclusion may come as you expected. Best is to start your efforts of credit score improvement at least one year before sending the mortgage application. After all, it is about buying your roof, and the efforts are required to be perfect.